PissedConsumer.com: Ascentive v. Opinion Corp.

I try to tread lightly with respect to blogging about cases I’m involved with, but there’s not much question that the December 13, 2011 Eastern District of New York opinion in Ascentive, LLC v. Opinion Corp., 2011 WL 6181452 (E.D.N.Y. Dec. 13, 2011) — in which my firm represents defendants — is something a trademark-oriented blog should report. Under the circumstances, it seems best to let other bloggers and commentators do the talking. And who better to start with than Eric Goldman, famous as one of the few law professors who admits sometimes reading practitioners’ blogs just because they might have something to say?:

Other vendors try to use trademark law to work around 47 USC 230. By definition, consumers must reference a vendor’s brand in order to review it, and trademark’s doctrinal plasticity means that such references arguably support a prima facie trademark claim. (I explain that issue more in my Online Word of Mouth paper). As a result, we’ve seen a number of vendors dabble with trademark claims against consumer reviews. For two examples, see Lifestyle Lift v. RealSelf and Eppley v. Iacovelli. (For more on the noteworthy litigiousness of doctors against consumer reviews, see this post).

In this case, the plaintiffs used trademark law to make a no-holds-barred assault on the 47 USC 230 immunity’s applicability to consumer reviews. Their arguments go nowhere. I hope this emphatic ruling will discourage other plaintiffs from trying to use trademark law to work around 230.

This week the United States District Court for the Eastern District of New York issued an excellent decision rejecting a series of bogus trademark claims and hence a motion for a preliminary injunction brought by Ascentive, a software maker, against Opinion Corp., whose PissedConsumer web site provides a forum for consumers to post complaints (or praise). Opinion Corp. hosts about a hundred messages about an Ascentive product that purports to enable home computer users to check for problems and increase a computer’s speed. . . .

The trademark claims were reminiscent of those put forward by investment bankers Houlihan Smith against Julia Forte’s 800Notes.com. The cases are different, though, because the allegation that Forte engaged SEO techniques to ensure high placement in searches for particular companies was a bald-faced lie. Indeed, Forte never put the plaintiff’s marks on her site at all. But unlike Houlihan Smith v. Forte, where we had only an oral opinion denying the motion for a preliminary injunction, in Ascentive the court laid out its analysis in detail, in an opinion that will be cited for years. We can be grateful both to Senior District Judge I. Leo Glasser . . . for this important precedent. . . .

The internet is rapidly overtaking traditional advertising media as the most important marketing tool for many retail brands. But the rapid, open communication that makes social media such a powerful marketing tool can be a double-edged sword. A critical review, customer complaint or harmful press item that goes “viral” can instantly and irreparably destroy years of reputation-building — and experience shows that once such damage is done in the court of internet opinion, it is all but impossible to reverse.

Unsurprisingly, then, companies are always searching for ways to prevent the dissemination and spread of harmful material over the internet. Where the content at issue contains trade secrets, copyrighted material, or other well-codified intellectual property, there are established legal procedures to have it removed. But where the content is merely harmful . . . targeted companies may find themselves without legal recourse. The law in this area seeks to strike a balance between the need to provide a free flow of information and the need to protect reputation and goodwill. A recent case from the federal court in the U.S. District Court for the Eastern District of New York, Ascentive, LLC v. Opinion Corp., demonstrates the complexities inherent in assessing that balance.

In Ascentive, the court denied plaintiffs’ application for a preliminary injunction prohibiting the continued publication of harmful reviews by defendants, even though it found some aspects of defendants’ web-based business “troubling and perhaps unethical.” The court held that it was “unable to find a legal remedy for conduct that may offend generally accepted standards of behavior.” Where a court is forced to reach the conclusion that “unethical” conduct is nonetheless without legal remedy, it is worth looking carefully at the case and the underlying law to understand the disconnect between the law and the marketplace.

As Levy notes, it appears that this is really an attempt to use trademark law in a manner to pretend that it’s defamation law — not that the case seems likely to succeed under either type of law. Indeed, as Levy also points out, the lawyer for Ascentive . . . talks about intellectual property in her bio, but has herself listed as a “reputation management attorney.” Of course, it’s difficult to see how filing questionable trademark claims that a judge rejects pretty soundly helps your reputation.

In this case, the notion of being “pissed” joins a lexicon of permissible gripe site nomenclature (depending on the circumstances, of course). So says the court: “Like the word ‘sucks,’ the word ‘pissed’ has entered the vernacular as a word instinct with criticism and negativity. Thus, no reasonable visitor to the [offending pages] would assume the sites to be affiliated with [plaintiffs], and PissedConsumer’s use of plaintiffs’ marks in the various domain names at issue is not likely to cause confusion as to source.”

Yeah; this is one case we have to be careful discussing in mixed company. And thanks, in a very special way, to the renowned Finnegan law firm, which offers the following analysis on its “Incontestible” newsletter — for Finnegan understands that a law firm web page that reports stuff and has “content” is not a “blog” just because it is on the Internet. I think I already said that somewhere. Anyway, here’s what David M. Kelly says about the Ascentive decision:

The court denied Plaintiffs’ motion for a preliminary injunction. First, the court weighed the Polaroidlikelihood-of-confusion factors and found that, although the strength-of-the-mark and degree-of-similarity factors weighed in Plaintiffs’ favor, the remaining factors weighed heavily against them, including that the parties did not have “competitive proximity.” Plaintiffs sold software and sleep products, respectively, whereas Opinion sold advertising and reputation-management services. Furthermore, neither Plaintiffs nor Opinion contended that their services might “bridge the gap” and enter into the other’s field. And it was “clear” to the court that Opinion was not using Plaintiffs’ marks as “source identifiers.” . . .

The court also held that Plaintiffs were not likely to succeed on the merits of their nontrademark state claims, including interference with contractual relations, unjust enrichment, and violations of Pennsylvania’s unfair trade practices and consumer-protection laws, because Opinion had immunity under the Communications Decency Act. Specifically, the court held that Opinion operated as a “service provider,” not an “information content provider,” because defendant “invite[d] postings and then in certain circumstances alter[ed] the way those postings are displayed.” . . .

Although the end result here is consistent with most other “gripe site” cases, this case was unusual for two reasons. First, Opinion used Plaintiffs’ marks in subdomains and metatags, and to advertise competitive goods and services, which goes beyond the extent of use in most “gripe site” cases. Second, Opinion’s business model invited trademark owners to pay to manage negative reviews that Opinion solicited for its own website.

“Solicited” does not sound quite right, but let’s end this survey of commentary with these stirring words from the treatment of the case by the redoubtable old Courthouse News:

The companies in PissedConsumer’s crosshairs probably will not be able to prove their extortion claims, but Google and other search engines may demolish the website’s presence by imposing the “death penalty,” Senior U.S. District Judge Leo Glasser warned. . .

“It strains credulity that an Internet user would believe that plaintiffs would sponsor or otherwise approve of a site that contains such criticisms,” he added. “Instead, after a brief inspection of the content of PissedConsumer’s website, the user would realize that they were visiting a third-party gripe site for ‘pissed’ consumers.” A footnote adds: “It also strains credulity that a consumer would believe PissedConsumer’s pages to be associated with the customer relations department of plaintiffs, one of Ascentive’s contentions.”

A strain, indeed — to the breaking point, it seems.

UPDATE: More nice words! Writing in the New York Law Journal’s “Expert Analysis” column, Paul Weiss partner Lewis Clayton said that the decision “reinforces the limits of trademark law’s power against ‘gripe sites’ and demonstrates how allegedly unethical use of trademarks is not coextensive with infringing use.” Analyzed also at the Austin Technology Law Blog (which found the Court’s closing thoughts “Lyrical, but little consolation to the plaintiffs”) and by J. Craig Williams at May it Please the Court who, disappointingly, gets some important facts wrong (such as stating that there was a defamation ruling, which there wasn’t — there wasn’t even a defamation claim) and, much like Paul Levy, leaps from allegations made on a motion to reportable “facts” about PissedConsumer’s conduct.

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The Title, the Blog and the Blogger

The question of whether consumers are likely to be confused is the signal inquiry that determines if a trademark infringement claim is valid. I write here about trademark law, copyright law, brands, free speech (mostly as it relates to the Internet) and legal issues related to blogging. That may sound like a lot, but it's just a blog.

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